Best bank:
Maybank
Best equity house:
CIMB
Best debt house:
CIMB
Best M&A house:
CIMB
Consolidation in Malaysia’s banking sector is still at the forefront of bankers’ and politicians’ minds. The first round has finished but many expect another two to follow. The technocrats at Bank Negara, the central bank, are very astute and while politicians remain distracted by elections and jockeying for favourable positions, the central bank may forge ahead with its plans. Consolidation in a country such as Malaysia is always going to be disruptive and painful. Banks that have merged are faced with problems of rationalization. Retrenchment of staff is not an easy process. The economy is slowing and this has stalled restructuring plans. NPLs are on the rise again. However, two banks stand out: Public Bank and Maybank.
Public Bank has been affected less by deteriorating assets than many banks have and its merger with Hock Hua Bank has enabled it to develop stronger relationships within corporate Malaysia.
Maybank, however, is a strong all-round player. It is the largest commercial bank in Malaysia by assets. It also has a large overseas network compared with its domestic competitors, with 31 branches. The bank’s management is described as competent and armed with long-term strategies. This contrasts with several other banks that are inwardly focused as they try to reorganize their internal structures. Despite Maybank’s having merged with the smaller, less stable PhileoAllied Bank and taking over the banking business of Pacific Bank, it hasn’t been knocked off course and is moving strongly into the retail sector.
Maybank is beginning to understand the strong potential of being able to cross-sell its products. For example, its insurance business was strengthened by a strategic tie up with Fortis International. Although the bank’s NPLs did increase – a problem suffered by many of its peers – to around 12.2%, analysts remain unconcerned, suggesting it is well within the capability of the bank to absorb them.
The strongest investment house across the board is CIMB. Critics suggest that this is more by default than by sheer quality of work. As consolidation got under way, banks such as RHB, which is widely applauded for its management and very capable bankers, were viewed as not being as committed to the government’s cause as they should be. As a result, work was not pushed their way and CIMB grew stronger. That may be, but more work means more experience.
Over the year the debt markets grew as the equity markets died. But what business the was, CIMB was there to receive with open arms – wherever it came from. It raised M$3 billion (US$790 billion) in equity funding and was involved with 12 new listings on the Kuala Lumpar Stock Exchange. CIMB took Bintulu Port Holdings into the market when investor confidence wasn’t sky-high, but successfully got the IPO away. It was one of the few oversubscribed IPOs in the past year. It holds a dominant position in the local bond market, claiming a 58% market share of bonds issued in 2000. It also ventured into the international debt market with the Malaysian government’s e650 million ($580 million) bond deal. Out of the 10 bank mergers, CIMB was involved in just under half. The list includes Public Bhd’s M$1 billion acquisition of six other financial institutions.
